is not less than a million kronor shall contain the words “enskild bank”; if the
capital is below that amount, it shall contain the word “folkbank” (people’s bank).
The shareholders in limited liability banking companies must be of Swedish
nationality, and number at least twenty. An unlimited liability banking company
must consist of at least thirty principal stockholders, who must be of
Swedish nationality, and the principal stockholders are liable jointly and severally
for all the commitments of the company. (The procedure by which the creditors
of the company can enforce this liability is laid down in the Unlimited Liability
Banks Bankruptcy Act of the Sept. 18 1903.) Every principal stockholder
shall file with the banking company a signed and attested document stating
the amount of stock he holds. A stockholder is not entitled to withdraw from
the company during the term of the charter, unless he obtain the company’s
express consent. The principal stockholders may, if they so desire, associate with
themselves a number of limited liability stockholders (kommanditlottagare) t
whose holdings may amount to half the original subscribed capital; such stockholders
are not liable for more than they have invested or engaged to investjin
the company. The shares in joint-stock banking companies and the stock in
unlimited banking companies shall be personal and inscribed. (The shares |o f
certain earlier joint-stock banking companies are still drawn out to bearer.)
board of directors is under the obligation to keep a share, or stock transfer register
(aktiebok or lottbok), in which all transfers of shares and stock shall be
immediately recorded. This transfer register shall be open to the inspection of
the public during banking hours. — Out of the annual profit at least'15 %. shall
be appropriated to the reserve fund, as long as the latter does not amount to
50 % of the original subscribed capital. — As regards the business of banking the
following enactments are in force: A banking company is only entitled, on its
own account, to trade in gold, domestic and foreign coins, bills, cheques, drafts,
and bonds. (With regard to the right of certain banks to deal in stocks and
shares, see below.) A banking company is not permitted to acquire any ^ real
property except for its own premises. However, a banking company is permitted
to take over personal or real property to cover an outstanding claim, if otherwise
loss would manifestly be incurred. A banking company is not permitted
to acquire or receive as a security its own shares, and an unlimited liability
banking company is not permitted to acquire or receive by way of security (its
own stock or the principal stock of another similar banking company. A banking
company whose reserve fund exceeds 50 % of the original capital is entitled to
invest any surplus beyond that figure in the shares of an underwriting bank.
Moreover, if the original capital and the reserve fund of the banking company
amount together to at least six million kronor, the banking company is entitled
to hold other shares up to half the amount of the above-mentioned surplus for
which the right to hold shares in an underwriting bank has not been utilized.
— The amount received by the banking company in the form of deposits shall
not exceed five times the amount of the company’s own funds, besides which
the banking company shall in its till or in readily negotiable assets show a cash
reserve to the extent of at least 25 % of the bank’s liabilities at call. Inide-
posits repayable after expiry of notice the certificate issued by the bank shall
be drawn out to a definite person named and shall contain the stipulation that
any transfer must be by endorsement to a definite person named. On a
customer’s savings-bank account interest is only payable on deposits not exceeding
3 000 kronor. A banking company shall not engage to repay deposits on a
savings-bank account without at least a week’s notice; moreover every deposit
and every withdrawal shall be entered in a pass-book to be supplied by t e
bank to the holder of the account.
Bank Inspection. The inspection of banks devolves upon a special office
designated Bankinspektionen, the Bank Inspection Board instructions for the
conduct of which have been issued by the Government. The inspection is
effected firstly by monthly reports, drawn up in accordance with a prescribed
form and lodged with the BankTuspection Board, secondly by a representative
appointedr for each bank, who has to take part in the annual auditing and at
least once every quarter take stock of the cash in the till at the bank’s head
office, examine whether the report last made agrees with the accounts, and in
ease of anything being found wrong at once report the matter to the Bank Inspection
Board, and finally by personal supervision carried out by one of the
members of the Board. The Board is entitled to convene meetings of the board
of directors of the bank, and in certain cases also extraordinary shareholders’
meetings. A member; of the Board is entitled to be present at the shareholders’
meetings, and at board meetings summoned by the Bank Inspection Board,
and to take part in the proceedings. I f the Board finds cause to assume that
10 % of the original capital (apart from the reserve and other funds) has
dwindled away in consequence of losses, the board of directors will be under
the obligation, when called upon by the Bank Inspection Board' to do so, immediately
to draw up a balance-sheet and to summon the auditors. The Bank
Inspection Board is empowered to veto a resolution of the board or of a shareholders’
meeting which infringes the law or the company’s articles of association.
In the case of grave transgressions of the Banks Act or the articles of association
of the company, it is open to the Government to declare the charter rescinded
— The expenses of bank inspection are at the charge of the banks
themselves, each bank contributing an annual fee of at most x/ioo % of the
aggregate amount of the bank’s funds (at present the contribution is fixed at
Viooo %).
The above account of Swedish banking legislation will have made it
evident that the object it has had in view has been to ensure the stability
of the banks in their capacity as bank’s of deposit. The clause in the 1911
Banks Act, according under certain provisoes the right to banks of dealing
in stocks and shares on their own behalf, is as a matter of fact of little
importance. Out of the banks at present (October 1914) existing, numbering
70 with a total capital of upwards of 660 mill, kr., there are
only 20 that fulfil the requirements entitling them to deal in stocks and
shares, while the total amount set apart for use in this direction is only
38 mill. kr. At the time named the total holding of stocks and shares
in the banks’ own possession stood entered in the books as amounting to
13 mill, kr. in value, i. e. insignificant sums as compared with the advances
that-the banks had granted to their customers at the same juncture, the
total of which was close upon 2 400 mill. kr. Of that amount, however,
734 mill. kr. consisted of advances made on the security of stocks and
shares. Besides the banks held bonds for an entered value of 225 mill. kr.
Though the Swedish banks, consequently, by buying bonds and by
making advances on stocks and shares, have rendered service to the industries
of the country, yet they have not been in a position to help them
as effectively, for instanoe, as the German “Effektenbanken”. This has
moreover been recognized as a drawback, and efforts have been made to
remove it.
The Underwriting Banks Act of 1909, above referred to, was designed to